Keith, Your clashes with Ed are always fun. We owe the two of you.
I have argued for some time that even the most inefficient of mixed economies can survive and prosper because of the incredible productivity we enjoy. The job of science is so to untangle the seeming complexity that simplicity emerges. Certainly economic scientists have forgotten that. I think too that Bush has forgotten that however strong an economy can be, one cannot keep taking chunks out of it before one finishes off the fat and starts feeding on the bone and organs. I begin to twitch when he comes on television and asks for a $100 million for this and $100 million for that. I wonder if the feds can head into court asking for a Chapter 11? (Bankruptcy) Harry __________________________ Keith wrote: >Ed, > >As always, I enjoy your well-crafted postings. However, I must beg to >differ quite fundamentally from your latest. > >You charge people like me with amplifying notions of free-trade,etc, into >an ideology. This seems so from your point of view only because (until >recently anyway) such "ideologists" have been relatively thin on the ground >and have had to raise their voices just that little bit louder than the >norm. When Milton Friedman reminded everybody in 1956 that money, like all >other goods, is subject to the laws of supply and demand, he was almost a >lone voice and took a lot of flak. It was only when the practice of Keynes' >ideas by western governments produced something like a 30- to 40-fold >devaluation of currencies in the '50/80s period, that it was realised that >Friedman was basically correct. That generation of treasury economists has >now retired or passed away, thank goodness. > >The basic problem is that the industrial revolution produced such fantastic >prosperity that developed countries' governments could easily afford huge >armies and navies at the turn of the 20th century which inevitably (with >hindsight) led to two world wars of hitherto unimaginable widespread >suffering (and dozens of smaller wars since which continue). A byproduct of >this is that such governments also felt it necessary to intrude into all >sorts of other activities (education, health, pensions, welfare, transport, >agriculture, etc) in order to keep their populations "strong". People are >now living in a sort of command economy as they never did in previous >centuries -- in effect, being governed as though on a war-footing. This may >seem an extreme way of putting it, but it is surely so when looked at >historically. > >A corollary of all this is that because government taxing and spending are >now so intertwined with the normal trading economy, then the economists of >the past century, no matter how brilliant some of them may have been, have >not been able to see the wood for the trees. Unlike other sciences, where >laws are successively refined and made simpler, economics has not been able >to do this in recent decades. Not yet anyway. Over the longer term, as >armaments become overwhelmingly dangerous and some sort of world order >(though not of the George Bush variety one hopes!) will have to be >established, then I am sure that economics will be seen to rest on some >simpler laws than now appears to be the case and Adam Smith and David >Ricardo will not be as vilified as now and will regain the sort of stature >that rightfully belongs to them -- the stature that Darwin has in biology >and Newton has in physics. > >You ended with: ><<<< >Do keep walking your dog. Great thoughts seem to come from that. If they >are not all yours, you may have the cleverest dog that ever lived. > >>>> > >My dog is now waiting impatiently at my side. She agrees wholebarkingly >with what I've written so far. However, if better ideas occur to us after >discussion during our walk then I'll write further. She's usually able to >sniff things out that I overlook. > >Keith > >At 11:00 30/07/02 -0400, you wrote: ><<<< >Keith, as is so often the case, you raise a number of mind-bending issues in >a single posting, including one that I'm sure we've debated before, whether >economics is a science. I would accept that it is, once certain prior >notions and assumptions have been accepted - people behave in their self >interest, it is better to produce more than less with given resources >(therefore assembly-line like specialization), the more you have or use of >something, the less productive or satisfying it is, etc. Once these props >are in place, you can build all kinds of things on top of them, including >dogmas about capitalism and freedom (Freedman), but there is always the >temptation to kick them out from under and demonstrate that the system you >have built is in fact a house of cards. Moreover, once you get into dogmas, >the science begins to stop and religion takes over. You abandon the >language of "what if." and get into that of "should" and "ought". > >But that's only one kind of economics. Another kind tries to figure out >what is happening out there, in the real dirty old world we live in, shop >in, and gain or lose jobs in. What relates to what? Why do we have >business cycles and what can we do about them? What might government do to >make life less painful during downturns? What might it do to slow down >booms, thus preventing a wastage of resources? What is the relationship >between the "paper wealth" of the stock market and the "real economy"? This >is where Keynes and a whole host of people since Keynes come in. Here, you >are never quite free of notions and basic assumptions, but you are less >inclined to build superstructures on top of them, and you discard them if >they don't really make sense in terms of what you find out. > >There is yet another kind of economics which has to do with fairness and >equity. This hinges on the appropriate balance, in society or even >globally, between rich and poor. To what extent, and by what means, should >you move income and wealth from the rich to the poor, or from both to >society as a whole? This kind of economics is, of course, not free from >concepts of social justice and collective versus individual >responsibilities. > >Government needs to be involved in all of the forgoing. Given that >competition is good and monopoly is bad in terms of the allocation of >society's resources, it needs to ensure, via anti-combines legislation, that >a reasonable level of competition prevails. Given that the business cycle >can be destructive of jobs and incomes (including government revenues), it >needs to do what it can to counter the cycle via stabilization policy. >Given that too wide a gap between the rich and poor can also cause problems >and raise costs that permeate all of society, it needs a slate of policies >focused on redistribution. And, because any society depends on a >combination of public and private goods, it must be prepared to provide a >certain level of physical and social infrastructure. > >What the left wing /right wing debate has been mostly about is not the >fundamental ideas of economics, but about how much of each of the foregoing >government must do. You may be right in suggesting that there are more left >leaning than right leaning people on this list. I, for example, believe >that functions of benefit to society as a whole, such as education and >health, should be operated by government. I also believe that government >should do everything it can to counter the vagaries of the business cycle. >And I believe in the redistribution of income and wealth, perhaps through >something like a GAI. However, these are not beliefs based on economics, >they are essentially political and part of my own personal dogma. They may >reflect the fact that I was born into the poverty of an immigrant family >during the Great Depression and worked as a unionized logger when I was a >young man. I really don't know where they came from, but I cannot attribute >them to Adam Smith, Milton Freedman, or even John Maynard Keynes. > >Do keep walking your dog. Great thoughts seem to come from that. If they >are not all yours, you may have the cleverest dog that ever lived. > >Ed ****************************** Harry Pollard Henry George School of LA Box 655 Tujunga CA 91042 [EMAIL PROTECTED] Tel: (818) 352-4141 Fax: (818) 353-2242 *******************************
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